Archive forMay, 2015

Gfk Consumer Confidence Index in the UK fell 3 points to +1 in May from +4 in April. In addition, the optimism over the economic situation and the personal finance prospects also lowered. The decline in the confidence stems from a lack of public faith in the economic prospects under a Conservative government, the Gfk said.

Queen Elizabeth outlined the referendum plans set by Cameron’s Conservative government, highlighting that the UK would renegotiate its relationship with the European Union for the benefit of all member states. A law facilitating a referendum, to take place by the end of 2017, is expected to be introduced in the parliament today.

The Confederation of British Industry (CBI)’s retail sales balance climbed to +51 in May, much ahead of April’s +12; the expected sales balance for June increased to +58. Meanwhile, the overall business situation reading improved to +20. The rise was ascribed to low inflation, which boosted consumer spending power.

IMF’s chief economist Olivier Blanchard informed that Greece’s reform plans to ensure a 3% budget surplus are insufficient as the most recent projections indicate a considerable budget deficit. He added that several structural issues need to be fixed. Greece is in negotiations with its international creditors to unlock €7.2bn in bailout cash.

According to a survey from the Confederation of British Industry, the total order book balance fell to -5 in May, its lowest in seven months, from +1 in April. However, the selling prices balance rose to +2 from -3 in April and the export order book balance improved to -7 from -11. Moreover, the manufacturers were optimistic about the short-term outlook.

According to the minutes from the Bank of England (BoE)’s meeting in May, the members of the monetary policy committee voted 9-0 in favour of holding the interest rates at 0.5%. Moreover, the minutes mentioned that inflation is expected to remain around zero in the near term, primarily led by a drop in food and energy prices.

The Office for National Statistics (ONS) revealed house prices in the UK increased 9.6% y-o-y in March compared with a 7.4% gain in February. The price rise was driven by lower activity levels especially due to reduced number of available homes in the run-up to the general elections. Several areas in the East of England, London and the South East of England reported a double-digit gain in prices. The average cost of a home in the UK stood at £273,000 in March.

The International Monetary Fund (IMF) revised its growth forecast for Italy to 0.7% for 2015 from the earlier projection of 0.5% in April.This would be the country’s first economic expansion since 2011. The upward revision was led by better-than-expected growth of 0.3% in the first three months of 2015. In addition, the agency marginally raised the growth outlook for 2016 to 1.2% from 1.1%.

Property tracking website Rightmove reported the average asking price for a new house in the UK declined 0.1% m-o-m (to around £285,891) in May, following a 1.6% m-o-m increase in April. The decline was largely ascribed to uncertainty during the run-up to the general elections.

The Bank of England Governor Mark Carney suggested that he favoured an early EU referendum on the country’s membership status in the EU, as the delay would lead to business uncertainty. The Conservatives promised to hold a referendum on Britain’s membership to the EU before the end of 2017.

In its quarterly report, the Bank of England (BoE) downwardly revised the 2015 growth forecast for the UK to 2.5% from 2.9% as estimated previously. Likewise, forecasts for 2016 were also trimmed to 2.6% from 2.9%. The bank expects inflation in the UK to be around 0.6% in 2015 and 1.6% in 2016.

At a meeting with his fellow European Union (EU) finance ministers in Brussels, the UK’s Finance Minister George Osborne said the new government has a ‘very clear mandate’ to change the terms of the country’s membership in the EU before a referendum on whether the UK should quit the bloc. The minister stated that the new government would be constructive but firm in negotiations with other EU partners.

The British Retail Consortium stated retail sales in the UK contracted 1.3% in April vis-à-vis a 4.3% rise in March. On a like-for-like basis, retail spending dropped 2.4% y-o-y compared with a 3.2% y-o-y increase in March. The sales were primarily impacted by the early Easter holidays.

The People’ s Bank of China slashed its benchmark lending rates by 25 basis points to 5.1% for supporting an ailing economy. This has been the third cut in the last six months. In 2014, the country’s growth rate stood at 7.4% compared with 7.7% in 2013.

According to the latest poll results for 499 declared seats out of the total 650, the Conservatives were leading in 216 seats, a gain of 17 seats, while the Labour Party was lagging at 200 seats, a loss of 29 seats. SNP emerged as the third largest party with 55 seats, a gain of 49 seats.

The latest PMI data from Markit revealed service providers in the UK commenced Q2 2015 on a strong note. The UK services PMI rose to 59.5 in April, increasing for 28 successive months, compared with 58.9 in March. Moreover, employment growth was strong and the sentiment remained optimistic despite the upcoming elections.

According to the British Retail Consortium (BRC), retail prices in the UK declined 1.9% y-o-y in April compared with a 2.1% y-o-y drop in March. Food items reported a deflation of 0.9% while the price of non-food items decelerated 2.5% for the month. With almost zero CPI and rising real wages, consumers are likely to benefit from the low prices.

A survey from Sentix revealed the investor confidence index dropped to 19.6 from 20.0 in April. The expectations measure also narrowed to 26.5 compared to 31.5 last month. However the investors remained more optimistic about the current situation as the index improved to 13.0 from 9.0 last month.

Data from Eurostat showed that the Eurozone’s unemployment rate remained unchanged at 11.3% in March, the lowest in nearly three years. The number of unemployed people in the region stood at 18.105 million. The jobless rate was 11.7% in March 2014.